LAX Planning to Allow Uber and Lyft, While Also Deregulating Taxis

It's becoming a common complaint at L.A. International Airport: Where's my Uber? Ridesharing companies are allowed to operate freely around the rest of the city, but they are still banned from picking up passengers at LAX. In fact, since 2013, airport cops have issued about 500 tickets to Uber and Lyft drivers for making illegal pickups.

That may soon change. Mayor Eric Garcetti has ordered LAX to draft new rules that would allow Uber and Lyft to operate. In a letter sent last fall, Garcetti urged the airport commission to create a "level playing field" for ridesharing companies and taxis.

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But that's a lot harder than it sounds. Taxis are subject to a byzantine set of regulations, which have been in place for decades. Airport officials are now considering imposing some of those rules on Uber and Lyft, while eliminating others for taxis. Neither is an easy task.

For their part, the taxi companies have seen their revenue shrink by 25-40 percent since Uber and Lyft launched in L.A. The airport represents their last stronghold, and they are fighting tooth and claw to hold onto it.

"It's not broken," says Rick Taylor, a spokesman for L.A. Yellow Cab. "Don't be messing with something that's not broken."

One of the key taxi regulations at LAX is the rotation system. L.A. allows only 2,300 cabs, from nine companies, to operate within city limits. Each cab is assigned a letter from A to E, and each is allowed to pick up passengers at LAX only on days assigned to their letter — that is, one of every five days.

The taxi companies like this system because it ensures that cabs have a short wait time between fares. Airport fares are lucrative. If all 2,300 drivers were allowed to go to LAX at any time, driver wait times would increase and each driver's income would go down. The system also forces drivers to serve the rest of the city on off days.

But now, for the sake of leveling the playing field, the airport is considering eliminating the rotation system. Otherwise, when Uber and Lyft are allowed into the airport, their drivers will have an advantage over taxis because they will be able to go there whenever they want.

"We do want to eliminate the one-in-five rule," said Steve Martin, the airport's chief operating officer, at a meeting last month. "We don't think it's necessary... In a deregulated environment, we would say, 'We don't need this rule.'"

That doesn't sit well at all with the taxi industry, which is fighting to preserve the current system in the face of deregulatory pressure.

"Taking away the rotation is a terrible idea," says Bill Rouse, the general manager of L.A. Yellow Cab. "Rationing ensures there are enough taxicabs on the streets outside the airport to serve taxi passengers across the city... If you did away with rotation, service to the remainder of the city would absolutely suffer."

LAX may end up only modifying the system, rather than scrapping it, if that's what the taxi companies prefer. But that would preserve the uneven playing field.

And that's only one issue. Consider traffic. To prevent Uber and Lyft drivers from clogging the already jammed loop roads, LAX is trying to work out a complex "geofencing" system. At any one time, the airport would allow no more than 30 or 40 cars from each ridesharing company — Uber, Lyft, and Sidecar — into the LAX perimeter. The airport also is looking at restricting rideshare pickups to the elevated departure level, where traffic is usually better.

In order to enforce violations, the airport would need to have access to the ridesharing companies' data. Rouse believes it will be too complicated, and that in the end, the ridesharing companies will flout or ignore the restrictions.

"The airport is gonna have its hands full," he says. "This is going to cost everybody in terms of congestion."

The airport does intend to impose a $4 fee on each ridesharing pickup, which is what taxis currently pay.

On many other issues, however, there is no plan to try to make Uber and taxis follow the same rules. As the taxi companies often point out, taxi drivers are subject to fingerprint-based background checks. (Uber and Lyft defend their own background checks, but their process does not use fingerprints.) The airport is not planning to impose stricter background check requirements on Uber and Lyft, nor is it planning to loosen the requirements on taxis.

Taxis are also subject to strict fare regulations citywide. Uber and Lyft, meanwhile, are free to cut prices to make themselves more competitive — often angering their own drivers. Uber also imposes surge pricing at peak times.

Eric Spiegelman, the chair of the L.A. Taxicab Commission, has been tasked by the mayor with coming up with citywide regulations to put Uber and taxis on equal footing. But since the state Public Utilities Commission has taken jurisdiction of ridesharing, all Spiegelman can really do to even things out is deregulate taxis.

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In an email, Spiegelman says he is looking at easing up on pricing regulations, and is exploring "dynamic faresetting." But even there, there's a limit to what he can do. While Uber and Lyft can raise and lower their fares at will, Spiegelman says he would only allow taxis to do so "provided that it makes sense from a driver revenue perspective." In other words, no angry drivers allowed.

Spiegelman also wants to require taxi companies to have a mobile app, which he said would make them more competitive. But Rouse points out that taxi companies already have an app — it's called Curb — which makes that requirement redundant.

"If having an app was a solution, we wouldn't have a problem," Rouse says.

As for LAX, Uber has the backing of the mayor and most of the airport commission. Yet it's not clear when the company will be allowed in. Garcetti asked to see draft regulations by the end of 2014, but officials are still working on it.